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2022 (8) TMI 1129 - AT - Income TaxAssessment u/s 153C - satisfaction recorded before the issue of notice or not? - HELD THAT - In the instant case, inspite of repeated requests from the AR, the Revenue has not produced any satisfaction note either to the assessee or before us. Further, it is also noted from the letter of the DCIT, Circle-3(1), Visakhapatnam that the satisfaction recorded before the issue of notice U/s. 153C was not found as per the order sheet notings. From the Circular No. 24/2015, dated 31/12/2015 it is noticed in para 4 that even if the AO of the searched person and the other person is one and the same, then also AO is required to record the satisfaction, as held by the various Courts. In the instant case, no such material has been brought before us by the ld. DR - Since the satisfaction was not recorded by the Assessing Officer before issue of notice U/s. 153C we are of the considered view that the order passed by the Ld. CIT(A) U/s. 153C of the Act deserves to be set aside for all the impugned assessment years - Assessee appeal allowed.
Issues Involved:
1. Assumption of jurisdiction under Section 153C of the Income Tax Act, 1961. 2. Taxation of rent received from leasing of house property. Issue-Wise Detailed Analysis: 1. Assumption of Jurisdiction under Section 153C: The primary issue in these appeals is whether the Assessing Officer (AO) properly assumed jurisdiction under Section 153C of the Income Tax Act, 1961. The assessee argued that the notice issued under Section 153C was not in conformity with legal requirements, particularly the absence of a recorded satisfaction note by the AO. The assessee's representative contended that as per the provisions of Section 153C, the AO must record a satisfaction note before issuing a notice to a person other than the searched person. This argument was supported by several case laws and a Circular No. 24/2015 issued by the Central Board of Direct Taxes (CBDT), which clarified that even if the AO for the searched person and the other person is the same, a satisfaction note is still mandatory. The Departmental Representative countered that the notice was issued based on the voluntary admission by the searched person, and since the AO was the same for both the searched person and the assessee, a separate satisfaction note was not required. However, the Tribunal found that no satisfaction note was recorded before issuing the notice under Section 153C, as confirmed by a letter from the DCIT, Circle-3(1), Visakhapatnam. The Tribunal referred to the Supreme Court decision in the case of CIT vs. Calcutta Knitwears and the CBDT Circular, which emphasized the necessity of recording a satisfaction note. The Tribunal concluded that the absence of a recorded satisfaction note rendered the assumption of jurisdiction under Section 153C invalid. Consequently, the order passed by the CIT(A) under Section 153C was set aside for all the assessment years in question. 2. Taxation of Rent Received from Leasing of House Property: The second issue raised by the assessee was the classification of rent received from leasing house property. The assessee contended that the rent should be taxed under the head "income from house property" rather than "income from other sources." However, since the primary issue of jurisdiction under Section 153C was decided in favor of the assessee, the Tribunal deemed it unnecessary to adjudicate this issue on merits. The Tribunal stated that the other grounds raised by the assessee became infructuous in light of the decision on the jurisdictional issue. Conclusion: In conclusion, the Tribunal allowed the appeals of the assessee, setting aside the orders passed under Section 153C due to the lack of a recorded satisfaction note by the AO. This decision rendered the other grounds raised by the assessee moot and unnecessary for further adjudication.
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